[Federal Register Volume 80, Number 151 (Thursday, August 6, 2015)]
[Proposed Rules]
[Pages 47328-47338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-18260]



[[Page 47327]]

Vol. 80

Thursday,

No. 151

August 6, 2015

Part XII





Department of Labor





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29 CFR Part 2





Equal Treatment in Department of Labor Programs for Faith-Based and 
Community Organizations; Protection of Religious Liberty of Department 
of Labor Social Service Providers and Beneficiaries; Proposed Rule

  Federal Register / Vol. 80 , No. 151 / Thursday, August 6, 2015 / 
Proposed Rules  

[[Page 47328]]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 2

RIN 1290-AA29


Equal Treatment in Department of Labor Programs for Faith-Based 
and Community Organizations; Protection of Religious Liberty of 
Department of Labor Social Service Providers and Beneficiaries

AGENCY: Office of the Secretary, Labor.

ACTION: Proposed rule; request for comments.

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SUMMARY: The United States Department of Labor (DOL or the Department) 
proposes to amend its general regulations regarding the equal treatment 
of religious organizations in Department of Labor programs and the 
protection of religious liberty for Department of Labor social service 
providers and beneficiaries. Specifically, this proposed rule would: 
Clarify the definition of direct and indirect financial assistance, 
replace the term ``inherently religious activities'' with the term 
``explicitly religious activities'' and define the latter term as 
``including activities that involve overt religious content such as 
worship, religious instruction, or proselytization,'' require faith-
based organizations administering a program supported with direct DOL 
financial assistance to provide beneficiaries with a written notice 
informing them of their religious liberty rights, including the right 
to a referral to an alternative provider if the beneficiary objects to 
the religious character of the organization providing services, and add 
a provision stating that decisions about awards of Federal financial 
assistance must be free from political interference and based on merit. 
These changes are necessitated by the issuance in November 2010, of 
Executive Order 13559, Fundamental Principles and Policymaking Criteria 
for Partnerships with Faith-Based and Other Neighborhood Organizations.

DATES: Comments must be submitted (postmarked, sent, or received) by 
October 5, 2015.

ADDRESSES: You may submit comments concerning the NPRM, identified by 
RIN number 1290-AA29, by any of the following methods:
    [ssquf] Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions on-line for submitting comments.
    [ssquf] Email: [email protected]. Include RIN number 1290-AA29 in the 
subject line of the message.
    [ssquf] Fax: (202) 693-6091 (for comments of 10 pages or less).
    [ssquf] Mail, hand delivery, express mail, messenger, or courier 
service: Phil Tom, Director, Center for Faith-Based and Neighborhood 
Partnerships (CFBNP), U.S. Department of Labor, 200 Constitution Ave. 
NW., Room C-2318, Washington, DC 20210.

    Instructions: Please submit your comments by only one method. 
Receipt of submissions will not be acknowledged; however, the sender 
may request confirmation that a submission has been received by 
telephoning (202) 693-6017. All submissions received must include the 
agency name and docket number or Regulatory Information Number (RIN) 
for this rulemaking. All comments received, including any personal 
information provided, are considered part of the public record and 
available for public inspection online at http://www.regulations.gov 
and during normal business hours at Room C-2318, 200 Constitution 
Avenue NW., Washington, DC 20210. Parties who wish to comment 
anonymously may do so by submitting their comments via 
www.regulations.gov, leaving the fields that would identify the 
commenter blank and including no identifying information in the comment 
itself. Comments submitted via www.regulations.gov are immediately 
available for public inspection. Upon request, individuals who require 
assistance to review comments will be provided with appropriate aids 
such as readers or print magnifiers. Copies of this NPRM will be made 
available in the following formats: Large print, electronic file on 
computer disc, and audiotape. To schedule an appointment to review the 
comments and/or to obtain this NPRM in an alternate format, contact 
CFBNP at (202) 693-6017.

FOR FURTHER INFORMATION CONTACT: Phil Tom, Director, Center for Faith-
Based and Neighborhood Partnerships (CFBNP), U.S. Department of Labor, 
Frances Perkins Building, 200 Constitution Ave. NW., Room C-2318, 
Washington, DC 20210; telephone: (202) 693-6017. Please note this is 
not a toll-free number. Individuals with hearing or speech impairments 
may access this telephone number via TTY by calling the toll-free 
Federal Information Relay Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    This proposal concerns and implements two Executive Orders: 
Executive Order 13279, Equal Protection of the Laws for Faith-Based and 
Community Organizations, issued on December 12, 2002, 67 FR 77141 (Dec. 
16, 2002) and Executive Order 13559, Fundamental Principles and 
Policymaking Criteria for Partnerships with Faith-Based and Other 
Neighborhood Organizations, issued on November 17, 2010, 75 FR 71319 
(Nov. 22, 2010), which amends Executive Order 13279. Executive Order 
13279 set forth the principles and policymaking criteria to guide 
Federal agencies in formulating and developing policies with 
implications for faith-based organizations and other community 
organizations, to ensure equal protection of the laws for faith-based 
and other community organizations, and to expand opportunities for, and 
strengthen the capacity of, faith-based and other community 
organizations to meet social needs in America's communities. In 
addition, Executive Order 13279 asked specified agency heads to review 
and evaluate existing policies relating to Federal financial assistance 
for social service programs and, where appropriate, to implement new 
policies that were consistent with and necessary to further the 
fundamental principles and policymaking criteria that have implications 
for faith-based and community organizations.
    On July 12, 2004, the Department of Labor issued regulations 
through notice and comment rulemaking implementing Executive Order 
13279 at 29 CFR part 2, subpart D, Equal Treatment in Department of 
Labor Programs for Religious Organizations; Protection of Religious 
Liberty of Department of Labor Social Service Providers and 
Beneficiaries (``Equal Treatment Regulations''), which apply to all 
providers that implement DOL-supported social service programs. 69 FR 
41882. These regulations clarify that faith-based and community 
organizations may participate in the Department's social service 
programs without regard to the organizations' religious character or 
affiliation, and are able to apply for and compete on an equal footing 
with other eligible organizations to receive DOL support. 29 CFR 2.30. 
In addition, these regulations ensure that the Department's social 
service programs are implemented in a manner consistent with the 
Constitution, including the Religion Clauses of the First Amendment. 
Id.
    The current Equal Treatment Regulations are divided into seven 
sections. Section 2.30 sets forth the purpose of the regulations as 
explained in the previous paragraph. Section 2.31 provides definitions 
for certain terms

[[Page 47329]]

used in the regulations, including ``Federal financial assistance,'' 
``social service program,'' ``DOL,'' ``DOL-supported social service 
program'', ``DOL social service program'', ``DOL social service 
provider,'' ``DOL social service intermediary provider,'' and the term 
``DOL support.'' Section 2.32 clarifies that religious organizations 
receiving DOL support may continue to carry out their religious 
activities provided that no direct DOL support is used to support 
inherently religious activities. Specifically, religious organizations 
that receive DOL support need not remove religious signs or symbols 
from their facilities offering DOL-supported services and may continue 
to select their board members and otherwise govern themselves on a 
religious basis.
    Currently, DOL social service providers, including State and local 
governments and other intermediaries administering DOL support, have 
certain responsibilities as recipients of DOL support. Section 2.33 of 
the Equal Treatment Regulations sets forth these responsibilities, 
namely that as providers of DOL support, they must not discriminate for 
or against a current or prospective beneficiary on the basis of 
religion or religious belief. In addition, they must ensure that no 
direct DOL support is used to support inherently religious activities, 
except in very limited circumstances, which are explained in paragraph 
(b)(3) of this section. As a general rule, if a provider engages in 
inherently religious activities, such activities must be offered 
separately, in time or location, from the social service programs 
receiving direct DOL financial assistance, and participation must be 
voluntary for the beneficiaries of DOL social service programs. 
Paragraph (c) of Sec.  2.33 clarifies that these responsibilities do 
not apply to social service programs where DOL support is provided to a 
religious organization indirectly. Religious and other non-governmental 
organizations will be considered to have received support indirectly, 
for example, if as a result of a program beneficiary's genuine and 
independent choice the beneficiary redeems a voucher, coupon, or 
certificate that allows the beneficiary to choose the service provider, 
or some other mechanism is provided to ensure that beneficiaries have a 
genuine and independent choice among providers or program options.
    Section 2.34 of the existing Equal Treatment Regulations addresses 
the application of the regulations to State and local funds. This 
section clarifies that if a State or local government contributes its 
own funds (voluntarily or in accordance with a matching funds program) 
to supplement Federal funds that support DOL social service programs, 
the State or local government has the option to segregate the Federal 
funds or commingle them. If the funds are commingled, the regulations 
apply to both the Federal and the State or local funds.
    Section 2.35 clarifies that receipt of DOL support does not cause 
religious organizations to forfeit their exemption from title VII of 
the Civil Rights Act of 1964's prohibitions on employment 
discrimination on the basis of religion. However, the Equal Treatment 
Regulations do not alter the effect of other statutes which may require 
recipients of certain types of DOL support to refrain from religious 
discrimination.
    Finally, Sec.  2.36 of the current rule establishes alternative 
mechanisms by which organizations can prove they are nonprofit, which 
is sometimes an eligibility requirement for receiving DOL support. Such 
mechanisms, however, do not apply where a statute requires a specific 
method for establishing nonprofit status.
    Shortly after taking office, President Obama signed Executive Order 
13498, Amendments to Executive Order 13199 and Establishment of the 
President's Advisory Council for Faith-Based and Neighborhood 
Partnerships, 74 FR 6533 (Feb. 9, 2009). Executive Order 13498 changed 
the name of the White House Office of Faith-Based and Community 
Initiatives to the White House Office of Faith-Based and Neighborhood 
Partnerships and established the President's Advisory Council for 
Faith-Based and Neighborhood Partnerships (Advisory Council). The 
President created the Advisory Council to bring together experts to, 
among other things, make recommendations to the President for changes 
in policies, programs, and practices that affect the delivery of social 
services by faith-based and other neighborhood organizations.
    The Advisory Council issued its recommendations in a report 
entitled A New Era of Partnerships: Report of Recommendations to the 
President in March 2010 (available at http://www.whitehouse.gov/sites/default/files/microsites/ofbnp-council-final-report.pdf). The Advisory 
Council Report included recommendations to amend Executive Order 13279 
in order to clarify the legal foundation of partnerships and offered a 
revised set of fundamental principles to guide agency decision-making 
in administering Federal financial assistance and support to faith-
based and neighborhood organizations.
    President Obama signed Executive Order 13559, Fundamental 
Principles and Policymaking Criteria for Partnerships with Faith-Based 
and Other Neighborhood Organizations, on November 17, 2010. 75 FR 71319 
(available at http://www.gpo.gov/fdsys/pkg/FR-2010-11-22/pdf/2010-29579.pdf). Executive Order 13559 incorporated the Advisory Council's 
recommendations by amending Executive Order 13279 to:
     emphasize that religious providers are welcome to compete 
for government social service funding and maintain a religious identity 
as described in the order;
     clarify (i) the principle that organizations engaging in 
explicitly religious activity must separate these activities in time or 
location from programs supported with direct Federal financial 
assistance, (ii) that participation in any explicit religious activity 
cannot be subsidized with direct Federal financial assistance, and 
(iii) that participation in such activities must be voluntary for the 
beneficiaries of the social service program supported with such Federal 
financial assistance;
     direct agencies to adopt regulations and guidance that 
distinguish between ``direct'' and ``indirect'' Federal financial 
assistance;
     clarify that the standards in these proposed regulations 
apply to sub-awards as well as prime awards;
     require agencies that provide Federal financial assistance 
for social service programs to post online regulations, guidance 
documents, and policies that have implications for faith-based and 
neighborhood organizations and to post online a list of entities 
receiving such assistance;
     state that the Federal government has an obligation to 
monitor and enforce all standards regarding the relationship between 
religion and government in ways that avoid excessive entanglement 
between religious bodies and governmental entities;
     require agencies that administer or award Federal 
financial assistance for social service programs to implement 
protections for the beneficiaries or prospective beneficiaries of those 
programs (these protections include providing referrals to alternative 
providers if the beneficiary objects to the religious character of the 
organization providing services, and ensuring that written notice of 
these and other protections is provided to beneficiaries before they 
enroll in or receive services from the program); and

[[Page 47330]]

     state that decisions about awards of Federal financial 
assistance must be free from political interference or even the 
appearance of such interference, and must be made on the basis of 
merit, not on the basis of the religious affiliation, or lack of 
affiliation, of the recipient organization.

In addition, Executive Order 13559 created the Interagency Working 
Group on Faith-Based and Other Neighborhood Partnerships (Working 
Group) to review and evaluate existing regulations, guidance documents, 
and policies. Executive Order 13559, Sec.  1(c) (amending Sec.  3 of 
Executive Order 13279).
    The Executive Order also required OMB, in coordination with the 
Department of Justice, to issue guidance to agencies on the 
implementation of the Order following receipt of the Working Group's 
report. In August 2013, OMB issued such guidance. In this guidance, OMB 
instructed specified agency heads to adopt regulations and guidance 
that will fulfill the requirements of the Executive Order to the extent 
such regulations and guidance do not exist and to amend any existing 
regulations and guidance to ensure that they are consistent with the 
requirements set forth in Executive Order 13559. Memorandum from Sylvia 
M. Burwell, Director, on Implementation of Executive Order 13559 to 
Heads of Executive Departments and Agencies (Aug. 2, 2013) (available 
at http://www.whitehouse.gov/sites/default/files/omb/memoranda/2013/m-13-19.pdf. Pursuant to the August 2, 2013 OMB Memo, the Department is 
hereby publishing this proposed rule amending its existing regulations 
to ensure they are consistent with Executive Order 13279 as amended by 
Executive Order 13559.
    As explained below, the Department's existing Equal Treatment 
Regulations at 29 CFR part 2, subpart D meet many of the provisions of 
Executive Order 13559. However, a few provisions will need to be 
revised or proposed in order to meet the requirements of Executive 
Order 13279 as amended. Existing sections Sec. Sec.  2.30 and 2.32 of 
the Equal Treatment Regulations emphasize that religious providers are 
eligible on the same basis as any other organization to seek DOL 
support or participate in DOL programs for which they are otherwise 
eligible. Section 2.32 also clarifies that religious providers retain 
their independence and religious identity. Section 2.33 prohibits 
discrimination against beneficiaries on the basis of religion or 
religious belief and sets forth the requirements related to inherently 
religious activities in DOL-supported social service programs. 
Specifically, Sec.  2.33 prohibits organizations from using direct DOL 
support for inherently religious activities, such as worship, religious 
instruction, or proselytization, and requires DOL social service 
providers to take certain steps to separate out in time or location 
their inherently religious activities from the services that they offer 
with direct DOL support. This provision also clarifies that the 
restrictions on inherently religious activities do not apply where DOL 
support is provided indirectly to organizations, or where there is 
extensive government control over the environment of a DOL-supported 
social service program, such that affirmative steps must be taken by 
the social service provider to ensure that beneficiaries are able to 
exercise freely their religion. And finally, the current Equal 
Treatment Regulations already apply to both prime and sub-awards. See 
29 CFR 2.31(f) (defining term ``DOL social service intermediary 
provider''); see also 29 CFR 2.33 (enumerating responsibilities of DOL 
providers, including intermediary providers and State and local 
governments administering DOL support).

II. Overview of Proposed Rule

A. Purpose of the Proposed Rule

    Consistent with Executive Order 13559, this proposed rule would 
revise the Department's Equal Treatment Regulations to: (1) clarify the 
distinction between direct and indirect Federal financial assistance as 
well as the rights and obligations of DOL social service providers; (2) 
replace the term ``inherently religious activities'' with the term 
``explicitly religious activities'' and define the latter term as 
``including activities that involve overt religious content such as 
worship, religious instruction, or proselytization,'' (3) require 
faith-based organizations administering a program supported with direct 
DOL financial assistance to provide beneficiaries with a written notice 
informing them of their religious liberty rights, including the right 
to a referral to an alternative provider if the beneficiary objects to 
the religious character of the organization providing services, and (4) 
add a provision stating that decisions about awards of Federal 
financial assistance must be free from political interference and made 
based on merit. These changes will ensure the Department's regulations 
implement all of the requirements of Executive Order 13279 as amended.

B. Proposed Amendments to DOL Equal Treatment Regulations

    DOL proposes to amend its Equal Treatment Regulations at 29 CFR 
part 2, subpart D to address the areas identified below.
1. Direct and Indirect Federal Financial Assistance
    Executive Order 13559 noted that new regulations should distinguish 
between ``direct'' and ``indirect'' Federal financial assistance 
because the limitation on explicitly religious activities applies to 
programs that are supported with ``direct'' Federal financial 
assistance but does not apply to programs supported with ``indirect'' 
Federal financial assistance. Executive Order 13559, Sec.  1(c) 
(amending Sec.  3(b) of Executive Order 13279).
    Programs are supported with direct Federal financial assistance 
when either the government or an intermediary, as identified in these 
proposed rules, selects a service provider and either purchases 
services from that provider (e.g., through a contract) or awards funds 
to that provider to carry out a social service (e.g., through a grant 
or cooperative agreement). Under these circumstances, there are no 
intervening steps in which the beneficiary's choice determines the 
provider's identity.
    ``Indirect'' Federal financial assistance is distinguishable 
because it places the choice of service provider in the hands of a 
beneficiary before the Federal government pays for the cost of that 
service through a voucher, certificate, or other similar means. For 
example, the Federal government could choose to allow the beneficiary 
to secure the needed service on his or her own. Alternatively, a 
Federal agency, operating under a neutral program of aid, could present 
each beneficiary or prospective beneficiary with a list of all 
qualified providers from which the beneficiary could obtain services 
using a Federal government-provided certificate, e.g. through the use 
of Individual Training Accounts. Either way, the Federal government 
empowers the beneficiary to choose for himself or herself whether to 
receive the needed services, including those that contain explicitly 
religious activities, through a faith-based or other neighborhood 
organization. The Federal government could then pay for the 
beneficiary's choice of provider by giving the beneficiary a voucher or 
similar document. Alternatively, the Federal government could choose to 
pay the provider directly after asking the beneficiary to indicate his 
or her choice. See Freedom From Religion Found. v.

[[Page 47331]]

McCallum, 324 F.3d 880, 882 (7th Cir. 2003).
    The Supreme Court has held that if a program meets certain 
criteria, the government may fund the program if, among other things, 
it places the benefit in the hands of individuals, who in turn have the 
freedom to choose the provider to which they take their benefit and 
``spend'' it, whether that provider is public or private, non-religious 
or religious. See Zelman v. Simmons-Harris, 536 U.S. 639, 652-53 
(2002). In these instances, the government does not encourage or 
promote any explicitly religious programs that may be among the options 
available to beneficiaries. Notably, the voucher scheme at issue in the 
Zelman decision, which was described by the Court as one of ``true 
private choice,'' id. at 653, was also neutral toward religion and 
offered beneficiaries adequate secular options.
    The Department's Equal Treatment Regulations currently note this 
distinction between direct and indirect financial assistance at 
paragraphs (b)(1) and (b)(3) of Sec.  2.33. The current regulations do 
not, however, provide explicit definitions for the terms ``direct 
Federal financial assistance'' and ``indirect Federal financial 
assistance,'' which might help to clarify the distinction. Accordingly, 
the Department proposes to add definitions of these terms to paragraph 
(a) of Sec.  2.31, the section containing the definition of certain 
terms used in the Equal Treatment Regulations. Paragraph (a) defines 
the term ``Federal financial assistance.'' Consistent with Executive 
Order 13559's mandate to adopt regulations on ``the distinction between 
`direct' and `indirect' Federal financial assistance,'' \1\ the 
proposed rule adds language to paragraph (a) indicating that Federal 
financial assistance may be direct or indirect. Proposed paragraph 
(a)(1) provides a definition for the term ``direct Federal financial 
assistance'' or ``Federal financial assistance provided directly'' and 
defines it to mean that the Government or an intermediary selects the 
provider and either purchases services from that provider (e.g., via a 
contract) or awards funds to that provider to carry out a service 
(e.g., via a grant or cooperative agreement). In general, Federal 
financial assistance will be treated as direct, unless it meets the 
definition of indirect Federal financial assistance or Federal 
financial assistance provided indirectly.
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    \1\ Executive Order 11246, Sec.  3(b)(iii), as amended by 
Executive Order 13559, Sec.  1.75 FR at 71321.
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    Proposed paragraph (a)(2) provides a definition for the term 
``indirect Federal financial assistance'' or ``Federal financial 
assistance provided indirectly'' and defines it to mean that the choice 
of the service provider is placed in the hands of the beneficiary, and 
the cost of that service is paid through a voucher, certificate, or 
other similar means of government-funded payment. Federal financial 
assistance provided to an organization is considered ``indirect'' when 
(1) the government funded program through which the beneficiary 
receives the voucher, certificate, or other similar means of 
government-funded payment is neutral toward religion; (2) the 
organization receives the assistance as a result of a decision of the 
beneficiary, not a decision of the government; and (3) the beneficiary 
has at least one adequate secular option for the use of the voucher, 
certificate, or other similar means of government-funded payment. 
Proposed paragraph (a)(3) notes that recipients of sub-awards that 
receive Federal financial assistance through programs administered by 
states or other intermediaries are not considered recipients of 
indirect Federal financial assistance.
2. Inherently Religious Activities
    Existing agency regulations and Executive Order 13279 prohibits 
non-governmental organizations from using direct Federal financial 
assistance (e.g., government grants, contracts, sub-grants, and 
subcontracts) for ``inherently religious activities, such as worship, 
religious instruction, and proselytization.'' The term ``inherently 
religious'' has proven confusing. In 2006, for example, the Government 
Accountability Office (GAO) found that, while all 26 of the religious 
social service providers it interviewed said they understood the 
prohibition on using direct Federal financial assistance for 
``inherently religious activities,'' four of the providers described 
acting in ways that appeared to violate that rule. GAO, Faith-Based and 
Community Initiative: Improvements in Monitoring Grantees and Measuring 
Performance Could Enhance Accountability, GAO-06-616, at 34-35 (June 
2006) (available at http://www.gao.gov/new.items/d06616.pdf).
    Further, while the Supreme Court has sometimes used the term 
``inherently religious,'' it has not used it to indicate the boundary 
of what the Government may subsidize with direct Federal financial 
assistance. If the term is interpreted narrowly, it could permit 
actions that the Constitution prohibits. On the other hand, one could 
also argue that the term ``inherently religious'' is too broad rather 
than too narrow. For example, some might consider their provision of a 
hot meal to a needy person to be an ``inherently religious'' act when 
it is undertaken from a sense of religious motivation or obligation, 
even though it has no overt religious content.
    The Supreme Court has determined that the Government cannot 
subsidize ``a specifically religious activity in an otherwise 
substantially secular setting.'' Hunt v. McNair, 413 U.S. 734, 743 
(1973). It has also said a direct aid program impermissibly advances 
religion when the aid results in governmental indoctrination of 
religion. See Mitchell v. Helms, 530 U.S. 793, 808 (2000) (Thomas, J., 
joined by Rehnquist, C.J., Scalia, and Kennedy, JJ., plurality); id. at 
845 (O'Connor, J., joined by Breyer, J., concurring in the judgment); 
Agostini v. Felton, 521 U.S. 203, 223 (1997). This terminology is 
fairly interpreted to prohibit the Government from directly subsidizing 
any ``explicitly religious activity,'' including activities that 
involve overt religious content. Thus, direct Federal financial 
assistance should not be used to pay for activities such as religious 
instruction, devotional exercises, worship, proselytizing or 
evangelism; production or dissemination of devotional guides or other 
religious materials; or counseling in which counselors introduce 
religious content. Similarly, direct Federal financial assistance may 
not be used to pay for equipment or supplies to the extent they are 
allocated to such activities. Activities that are secular in content, 
such as serving meals to the needy or using a nonreligious text to 
teach someone to read, are not considered ``explicitly religious 
activities'' merely because the provider is religiously motivated to 
provide those services. Secular activity also includes the study or 
acknowledgement of religion as a historical or cultural reality.
    The Department, therefore, proposes to replace the term 
``inherently religious activities'' with the term ``explicitly 
religious activities'' throughout the Equal Treatment Regulations and 
to define the latter term as ``including activities that involve overt 
religious content such as worship, religious instruction, or 
proselytization.'' These changes in language are consistent with the 
use of the term ``explicitly religious activities'' in Executive Order 
13559 and will provide greater clarity and more closely match 
constitutional standards as they have been developed in case law.
3. Intermediaries
    The Department also proposes to add regulatory language at proposed

[[Page 47332]]

Sec.  2.33(d) that will clarify the rights and responsibilities of 
intermediaries. An intermediary is an entity, including a non-
governmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, that accepts Federal financial assistance and distributes 
that assistance to other organizations that, in turn, provide 
government-funded social services. Each intermediary must abide by all 
statutory and regulatory requirements by, for example, providing any 
services supported with direct Federal financial assistance in a 
religiously neutral manner that does not include explicitly religious 
activities. The intermediary also has the same duties as the government 
to comply with these rules by, for example, selecting any providers to 
receive Federal financial assistance in a manner that does not favor or 
disfavor organizations on the basis of religion or religious belief. 
While intermediaries may be used to distribute Federal financial 
assistance to other organizations in some programs, intermediaries 
remain accountable for the Federal financial assistance they disburse. 
Accordingly, intermediaries must ensure that any providers to which 
they disburse Federal financial assistance also comply with these 
rules. If the intermediary is a non-governmental organization, it 
retains all other rights of a non-governmental organization under the 
statutory and regulatory provisions governing the program.
    A State's use of intermediaries does not relieve the State of its 
traditional responsibility to effectively monitor the actions of such 
organizations. States are obligated to manage the day-to-day operations 
of grant- and sub-grant- supported activities to ensure compliance with 
applicable Federal requirements and performance goals. Moreover, a 
State's use of intermediaries does not relieve the State of its 
responsibility to ensure that providers are selected, and deliver 
services, in a manner consistent with the First Amendment's 
Establishment Clause.
4. Protections for Beneficiaries
    Executive Order 13559 indicates a variety of valuable protections 
for the religious liberty rights of social service beneficiaries. These 
protections are aimed at ensuring that Federal financial assistance is 
not used to coerce or pressure beneficiaries along religious lines, and 
to make beneficiaries aware of their rights, through appropriate 
notice, when potentially obtaining services from providers with a 
religious affiliation.
    Both section 2(d) of Executive Order 13279 as amended and the 
Department's current Equal Treatment Regulations make clear that all 
organizations that receive Federal financial assistance for the purpose 
of delivering social services are prohibited from discriminating 
against beneficiaries or potential beneficiaries of those programs on 
the basis of religion, a religious belief, refusal to hold a religious 
belief, or a refusal to attend or participate in a religious practice. 
Executive Order 13559, Sec.  1(b) (amending Sec.  2(d) of Executive 
Order 13279); 29 CFR 2.33. Both also state that organizations offering 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction or 
proselytization) must not use direct Federal financial assistance to 
subsidize or support those activities, and that any explicitly 
religious activities must be offered outside of programs that are 
supported with direct Federal financial assistance (including through 
prime awards or sub-awards). Executive Order 13559, Sec.  1(b) 
(amending Sec.  2(f) of Executive Order 13279); 29 CFR 2.33. In other 
words, to the extent that an organization provides explicitly religious 
activities, those activities must be offered separately in time or 
location from programs or services supported with direct Federal 
financial assistance. And, as noted above, participation in those 
religious activities must be completely voluntary for beneficiaries of 
programs supported by direct Federal financial assistance.
    To strengthen the protections provided to beneficiaries, Executive 
Order 13559 requires that organizations administering a program that is 
supported by direct Federal financial assistance must give written 
notice in a manner prescribed by the Department to beneficiaries and 
prospective beneficiaries of their religious liberty rights, including 
the right to be referred to an alternative provider when available. If 
a beneficiary or prospective beneficiary of a social service program 
supported by Federal financial assistance objects to the religious 
character of an organization that provides services under the program, 
the social service program must refer the beneficiary to an alternative 
provider. Accordingly, the proposed rule supplements existing 
beneficiary protections in the Equal Treatment Regulations by adding 
two new sections to the regulations--one addressing the written notice 
requirement at proposed Sec.  2.34 and the other addressing the 
referral requirement at proposed Sec.  2.35. In light of the addition 
of these two new sections, the existing sections discussing the 
application to State and local funds at Sec.  2.34, the effect of DOL 
support on title VII employment nondiscrimination requirements and on 
other existing statutes at Sec.  2.35, and the status of nonprofit 
organizations at Sec.  2.36 are redesignated as Sec. Sec.  2.36, 2.37, 
and 2.38 respectively.
a. Written Notice
    Executive Order 13279, as amended by Executive Order 13559, 
requires that the Secretary of Labor, among other agency heads, 
establish policies and procedures designed to ensure that each 
beneficiary of a social service program receives written notice of 
their religious liberty rights. Executive Order 13279, Sec.  2(h)(ii) 
as amended by Executive Order 13559, Sec.  1.75 FR at 71320-21. 
Consistent with this mandate, proposed Sec.  2.34 requires DOL social 
service providers with a religious affiliation to give beneficiaries 
written notice of their religious liberty rights when seeking or 
obtaining services supported by direct DOL financial assistance. The 
notice is set forth in proposed paragraph (a) and informs beneficiaries 
that:
    (1) the organization may not discriminate against beneficiaries on 
the basis of religion or religious belief;
    (2) the organization may not require beneficiaries to attend or 
participate in any explicitly religious activities, and any 
participation by beneficiaries in such activities must be purely 
voluntary;
    (3) the organization must separate out in time or location any 
explicitly religious activities from activities supported with direct 
DOL support;
    (4) if a beneficiary objects to the religious character of the 
organization, the organization will undertake reasonable efforts to 
identify and refer the beneficiary to an alternative provider to which 
the prospective beneficiary has no objection; and
    (5) beneficiaries may report violations of these enumerated 
religious liberty rights to the Civil Rights Center, Room N-4123, 200 
Constitution Avenue NW., Washington, DC 20210, 
[email protected].
    The purpose of the notice is to make beneficiaries aware of their 
religious liberty rights and helps to ensure that beneficiaries are not 
coerced or pressured along religious lines in order to obtain DOL-
supported social service programs. Paragraph (a) provides that DOL 
social service providers may post and distribute exact duplicate copies 
of the notice, including through electronic means. Paragraph (b) 
requires that the notice be given to beneficiaries before they enroll 
in the program or receive

[[Page 47333]]

services from such programs. However, when the nature of the service 
provided--such as a one-time emergency hotline call--or exigent 
circumstances make it impracticable to provide such written notice in 
advance of the actual service, DOL social service providers are to 
advise beneficiaries of their protections at the earliest available 
opportunity.
b. Referral Requirements
    Proposed Sec.  2.35 implements Executive Order 13559's requirement 
that a beneficiary be referred to an alternative provider when he or 
she objects to the religious character of an organization that provides 
services under the federally-financed program. Executive Order 11246, 
Sec.  2(h)(i) as amended by Executive Order 13559, Sec.  1. 75 FR at 
71320. Accordingly, paragraph (a) of proposed Sec.  2.35 provides that, 
if a beneficiary or prospective beneficiary of a social service program 
supported by direct Federal financial assistance objects to the 
religious character of an organization that provides services under the 
program, that organization shall promptly undertake reasonable efforts 
to identify and refer the beneficiary to an alternative provider to 
which the prospective beneficiary has no objection.
    Paragraph (b) states that a referral may be made to another 
religiously affiliated provider, if the beneficiary has no objection to 
that provider. But if the beneficiary requests a secular provider, and 
a secular provider that offers the needed services is available, then a 
referral must be made to that provider.
    Paragraph (c) of proposed Sec.  2.35 specifies that, except for 
services provided by telephone, internet, or similar means, the 
referral must be to an alternative provider that is in geographic 
proximity to the organization making the referral and that offers 
services that are similar in substance and quality to those offered by 
the organization. The alternative provider also must have the capacity 
to accept additional clients. If a Federally-supported alternative 
provider meets these requirements and is acceptable to the beneficiary, 
a referral should be made to that provider. If, however, there is no 
Federally-supported alternative provider that meets these requirements 
and is acceptable to the beneficiary, a referral should be made to an 
alternative provider that does not receive Federal financial assistance 
but does meet these requirements and is acceptable to the beneficiary.
    If an organization is unable to identify an alternative provider, 
the organization is required under paragraph (d) of proposed Sec.  2.35 
to notify the awarding entity and that entity is to determine whether 
there is any other suitable alternative provider to which the 
beneficiary may be referred. Paragraph (e) notes that a DOL social 
service intermediary provider may request assistance from the 
Department in identifying an alternative service provider. Further, the 
executive order and the proposed rule require the relevant government 
agency to ensure that appropriate and timely referrals are made to an 
appropriate provider, and that referrals are made in a manner 
consistent with applicable privacy laws and regulations. It must be 
noted, however, that in some instances, the awarding entity may also be 
unable to identify a suitable alternative provider. The Department 
requests specific comment on proposed Sec.  2.35 and the referral 
requirement.
5. Political or Religious Affiliation
    Consistent with Sec.  2(j) of Executive Order 11246 as amended by 
Sec.  1 of Executive Order 13559, the proposed rule adds a new 
provision at proposed Sec.  2.39 to require that decisions about awards 
of Federal financial assistance must be free from political 
interference or even the appearance of such interference and must be 
made based on merit, not on the basis of religion or religious belief. 
This requirement will increase confidence that the rules applicable to 
federally funded partnerships are actually being observed and that 
decisions about government grants are made on the merits of proposals, 
not on political or religious considerations. The awarding entity must 
instruct participants in the awarding process to refrain from taking 
religious affiliations or non-religious affiliations into account in 
this process; i.e., an organization should not receive favorable or 
unfavorable marks merely because it is affiliated or unaffiliated with 
a religious body, or related or unrelated to a specific religion. When 
selecting reviewers, the awarding entity should never ask about 
religious affiliation or take such matters into account. But it should 
encourage religious, political and professional diversity among 
reviewers by advertising for these positions in a wide variety of 
venues.
6. Miscellaneous Provisions
    The proposed rule would also modify the following provisions:
a. Definition of DOL Social Service Intermediary Provider
    The proposed rule would modify the definition of the term ``DOL 
social service intermediary provider'' in Sec.  2.31(f) by adding that 
the term encompasses non-governmental organizations. This change 
clarifies that non-governmental organizations have the same obligations 
as governmental intermediary providers, such as state agencies.
b. Protection of Religious Organizations' Independence
    Consistent with Section 2(g) of Executive Order 13559, the proposed 
rule would modify Sec.  2.32(b) by adding the term ``development'' to 
indicate that the development of religious beliefs is protected for 
faith-based organizations that apply for, or participate in, a social 
service program supported with Federal financial assistance.

III. Regulatory Procedures

Executive Orders 12866 and 13563

    Executive Orders (E.O.) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
reducing costs, harmonizing rules, and promoting flexibility. Section 
3(f) of E.O. 12866 defines a ``significant regulatory action'' as an 
action that is likely to result in a rule that: (1) Has an annual 
effect on the economy of $100 million or more or adversely and 
materially affects a sector of the economy, productivity, competition, 
jobs, the environment, public health or safety, or State, local or 
Tribal governments or communities (also referred to as ``economically 
significant''); (2) creates serious inconsistency or otherwise 
interferes with an action taken or planned by another agency; (3) 
materially alters the budgetary impacts of entitlement grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raises novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in E.O. 12866.
    The Department believes that the only provisions of this proposed 
rule likely to impose costs on the regulated community are the 
requirements that DOL social service providers with a religious 
affiliation: (1) Give beneficiaries a written notice informing them of 
their religious liberty rights when seeking or obtaining services 
supported by direct DOL financial

[[Page 47334]]

assistance, (2) at the beneficiary's request, make reasonable efforts 
to identify and refer the beneficiary to an alternative provider to 
which the beneficiary has no objection, and (3) document such action. 
To minimize compliance costs on DOL social service providers, the 
proposed rule provides the language of the notice directly within the 
proposed rule.
    An estimate of the cost of providing this notice and referring 
beneficiaries is discussed in the Paperwork Reduction Act section of 
this proposed rule. To minimize compliance costs and allow maximum 
flexibility in implementation, the Department has elected not to 
establish a specific format for the referrals required when 
beneficiaries request an alternative provider. To estimate the cost of 
the referral provision, the Department would need to know the number of 
religious direct social service providers funded by DOL annually, the 
number of beneficiaries who would ask for a referral, the costs of 
making the referral and notifying relevant parties of the referral.
    Unfortunately, at this time, there is no known source of 
information to quantify precisely the numbers or proportions of program 
beneficiaries who will request referral to alternative providers. We 
are not aware of any instances in which a beneficiary of a program of 
the Department has objected to receiving services from a faith-based 
organization. There is a possibility that because of this rule, when 
beneficiaries start receiving notices of their right to request 
referral to an alternative service provider, more of them may raise 
objections. However, our estimate of the number of referrals is also 
informed by the experience of the Department of Health and Human 
Services, Substance Abuse and Mental Health Services Administration 
(SAMHSA), which administers beneficiary substance abuse service 
programs under titles V and XIX of the Public Health Service Act, 42 
U.S.C. 290aa, et seq. and 42 U.S.C. 300x-21 et seq. Specifically, 42 
U.S.C. 290kk-1 and 300x-65, require faith-based organizations that 
receive assistance under the Act to provide notice to beneficiaries of 
their right under statute to request an alternative service provider. 
Recipients of assistance must also report all referrals to the 
appropriate federal, state, or local government agency that administers 
the SAMHSA program. To date, SAMHSA has not received any reports of 
referral by recipients or subrecipients. The Department invites 
interested parties to provide data on which to base estimates of the 
number of beneficiaries who will request referral to an alternative 
service provider and the attendant compliance cost service providers 
may face.
    Notwithstanding the absence of concrete data, the Department 
believes that this proposed rule is not significant within the meaning 
of the Executive Order because the annual costs associated with 
complying with the written notice and referral requirements will not 
approach $100 million.

Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires 
agencies to prepare and make available for public comment an initial 
regulatory flexibility analysis which will describe the impact of the 
proposed rule on small entities. Section 605 of the RFA allows an 
agency to certify a rule, in lieu of preparing an analysis, if the 
proposed rulemaking is not expected to have a significant economic 
impact on a substantial number of small entities. Furthermore, under 
the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 801 (SBREFA), an agency is required to produce compliance 
guidance for small entities if the rule has a significant economic 
impact on a substantial number of small entities. The RFA defines small 
entities as small business concerns, small not-for-profit enterprises, 
or small governmental jurisdictions. As described above, the Department 
has made every effort to ensure that the disclosure and referral 
requirements of the proposed rule impose minimum burden and allow 
maximum flexibility in implementation by providing in the rule the 
notice for providers to give beneficiaries informing them of their 
rights and by not proscribing a specific format for making referrals. 
The Department estimates it will take no more than two minutes for 
providers to print, duplicate, and distribute an adequate number of 
disclosure notices for potential beneficiaries. Using the May 2013 
Bureau of Labor Statistics hourly mean wage for a Training and 
Development Specialist of $29.22 results in an estimate of the labor 
cost per service provider of preparing the notice of approximately 
$0.97. In addition, the Department estimates an upper limit of $100 for 
the annual cost of materials (paper, ink, toner) to print multiple 
copies of the notices. Because these costs will be borne by every small 
service provider with a religious affiliation, the Department believes 
that a substantial number of these small entities may be affected by 
this provision. However, the Department does not believe that a 
compliance cost of less than $200 per provider per year is a 
significant percentage of a provider's total revenue. In addition, we 
note that after the first year, the labor cost associated with 
compliance will likely decrease significantly because small service 
providers will be familiar with the requirements.
    The rule will also require religious social service providers, at 
the beneficiary's request, to make reasonable efforts to identify and 
refer the beneficiary to an alternative provider to which the 
beneficiary has no objection. If an organization is unable to identify 
an alternative provider, the organization is required to notify the 
awarding entity and that entity is to determine whether there is any 
other suitable alternative provider to which the beneficiary may be 
referred. A DOL social service intermediary may request assistance from 
the Department in identifying an alternative service provider. The 
Department estimates that each referral request will require no more 
than two hours of a Training and Development Specialist's time to 
process at a labor cost of $29.22 per hour. Although we do not have any 
way to determine the number of referrals that will occur in any one 
year, the Department does not believe that referral costs will be 
appreciable for small service providers. The Department invites 
interested parties to provide data on which we can formulate better 
estimates of the compliance costs associated with the disclosure and 
referral requirements of this proposed rule.

Paperwork Reduction Act

    The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 
U.S.C. 3501 et seq., include minimizing the paperwork burden on 
affected entities. The PRA requires certain actions before an agency 
can adopt or revise a collection of information, including publishing a 
summary of the collection of information and a brief description of the 
need for and proposed use of the information.
    A Federal agency may not conduct or sponsor a collection of 
information unless it is approved by OMB under the PRA, and displays a 
currently valid OMB control number, and the public is not required to 
respond to a collection of information unless it displays a currently 
valid OMB control number. Also, notwithstanding any other provisions of 
law, no person shall be subject to penalty for failing to comply with a 
collection of information if the collection of information does not 
display a currently valid OMB control number (44 U.S.C. 3512). This 
rule proposes a new information collection.

[[Page 47335]]

    Section 2.34 would impose requirements on religious social service 
providers to give beneficiaries (or potential beneficiaries) a 
standardized notice instructing (potential) beneficiaries of their 
rights and requiring an occasional written response that may impose a 
burden under the PRA. The Department has determined this notice is not 
a collection of information subject to OMB clearance under the PRA 
because the Federal Government has provided the exact text that a 
provider must use. See 5 CFR 1320.3(c)(2). The beneficiary's response, 
however, is subject to OMB clearance under the PRA. Care has been taken 
to limit the information to simply obtaining minimal identifying 
information and providing check boxes for material responses.
    Section 2.35 would require that when a beneficiary or prospective 
beneficiary of a social service program supported by direct DOL 
financial assistance objects to the religious character of an 
organization that provides services under the program, that 
organization must promptly undertake reasonable efforts to identify and 
refer the beneficiary to an alternative provider. The referral process 
could entail collections of information subject to PRA clearance, 
specifically, informing the beneficiary of a referral to an alternative 
provider. If an organization is unable to identify an alternative 
provider, the organization is required under paragraph (d) of proposed 
Sec.  2.35 to notify the awarding entity and that awarding entity is to 
determine whether there is any other suitable alternative provider to 
which the beneficiary may be referred. Paragraph (e) notes that a DOL 
social service intermediary provider may request assistance from the 
Department in identifying an alternative service provider. Further, the 
executive order and the proposed rule require the relevant government 
agency to ensure that appropriate and timely referrals are made to an 
appropriate provider, and that referrals are made in a manner 
consistent with applicable privacy laws and regulations.
    Religious social service providers that would be subject to these 
requirements would have to keep records to show that they have met the 
referral requirements in the proposed regulations. (The religious 
social service provider will be required to complete the referral form, 
notify the awarding entity, and maintain information only if a 
beneficiary requests a referral to an alternate provider.) In the case 
of paper notices, religious social service providers could meet the 
record-keeping requirements in these proposed regulations by keeping 
the bottom portion of the notice. For those religious social service 
providers that provide notice electronically, the notices would have to 
include a means for beneficiaries to request an alternative placement--
and follow-up, if desired--that is recorded so the religious social 
service providers may retain evidence of compliance with these proposed 
regulations. We do not include an estimate of the burden of maintaining 
the records needed to demonstrate compliance with the requirements 
imposed on religious social service providers. The record-keeping 
burden that these proposed regulations would add is so small that, 
under most programs, it would not measurably increase the burden that 
already exists under current program and administrative requirements. 
If, due to the unique nature of a particular program, the record-
keeping burden associated with these proposed regulations is large 
enough to be measurable, that burden will be calculated under the 
record-keeping and reporting requirements of the affected program and 
identified in information collection requests that are submitted to OMB 
for PRA approval. Therefore, we have not included any estimate of 
record-keeping burden in this PRA analysis.
    Concurrent with publication of this NPRM, the Department is 
submitting an information collection request (ICR) to the OMB to obtain 
PRA approval for the proposed information collection requirements. A 
copy of this ICR with applicable supporting documentation including a 
description of the likely respondents, proposed frequency of response, 
and estimated total burden may be obtained free of charge from the 
RegInfo.gov Web site on the day following publication of this notice or 
by contacting Michel Smyth by telephone at 202-693-4129, TTY 202-693-
8064, (these are not toll-free numbers) or sending an email to 
[email protected].
    As part of its continuing effort to reduce paperwork burdens, the 
Department conducts a preclearance consultation program to provide the 
general public and Federal agencies with an opportunity to comment on 
collections of information in accordance with the PRA. This program 
helps to ensure that requested data can be provided in the desired 
format, reporting burden (time and financial resources) is minimized, 
collection instruments are clearly understood, and the impact of 
collection requirements on respondents can be properly assessed. A 
comment to the Department about the information collection requirements 
may be submitted in the same way as any other comment for this 
rulemaking. In addition to having an opportunity to file comments with 
the Department, written comments under the PRA about the information 
collection requirements may be addressed to the OMB. Comments to the 
OMB should be directed to: Office of Information and Regulatory 
Affairs, Attention OMB Desk Officer for the DOL-OS, Office of 
Management and Budget, Room 10235, Washington, DC 20503. You can also 
submit comments to OMB by email at [email protected]. The OMB 
will consider all written comments it receives within 30 days of 
publication of this information collection.
    The OMB and the Department are particularly interested in comments 
that:
     Evaluate whether the collections of information are 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of IT (e.g., permitting electronic submission 
of responses.
    The burden for the information collection provisions of this NPRM 
can be summarized as follows:
    Agency: DOL-OS.
    Title of Collection: Grant Beneficiary Referrals.
    OMB ICR Reference Number Control Number: 1291-0NEW.
    Affected Public: State and local governments; Private Sector--not-
for-profit institutions; and Individuals or Households.
    Frequency of Response: On occasion.
    Total Estimated Number of Respondents: 38.
    Total Estimated Number of Responses: 38.
    Total Estimated Annual Burden Hours: 9.
    Total Estimated Other Costs: $0.

Executive Order 13132

    Section 6 of Executive Order 13132 requires Federal agencies to 
consult with State entities when a regulation or policy may have a 
substantial direct

[[Page 47336]]

effect on the States or the relationship between the National 
Government and the States, or the distribution of power and 
responsibilities among the various levels of government, within the 
meaning of the Executive Order. Section 3(b) of the Executive Order 
further provides that Federal agencies must implement regulations that 
have a substantial direct effect only if statutory authority permits 
the regulation and it is of national significance.
    This proposed rule does not have a substantial direct effect on the 
States or the relationship between the National Government and the 
States, or the distribution of power and responsibilities among the 
various levels of Government, within the meaning of the Executive Order 
13132. Any action taken by a State as a result of the proposed rule 
would be at its own discretion as the rule imposes no requirements.

Unfunded Mandates Reform Act of 1995

    This regulatory action has been reviewed in accordance with the 
Unfunded Mandates Reform Act of 1995 (Reform Act). Under the Reform 
Act, a Federal agency must determine whether a regulation proposes a 
Federal mandate that would result in increased expenditures by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any single year. The Department has 
determined this proposed rule does not include any Federal mandate that 
may result in increased expenditure by State, local, and Tribal 
governments in the aggregate of more than $100 million, or increased 
expenditures by the private sector of more than $100 million.

Effect on Family Life

    The Department certifies that this proposed rule has been assessed 
according to section 654 of the Treasury and General Government 
Appropriations Act, enacted as part of the Omnibus Consolidated and 
Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 
Stat. 2681), for its effect on family well-being. It will not adversely 
affect the well-being of the nation's families. Therefore, the 
Department certifies that this proposed rule does not adversely impact 
family well-being.

List of Subjects in 29 CFR Part 2

    Administrative practice and procedure, Claims, Courts, Government 
employees, Religious Discrimination.

    For the reasons set forth in the preamble, the Department of Labor 
amends part 2 of title 29 of the Code of Federal Regulations as set 
forth below.

PART 2--GENERAL REGULATIONS

Subpart D--Equal Treatment in Department of Labor Programs for 
Religious Organizations; Protection of Religious Liberty of 
Department of Labor Social Service Providers and Beneficiaries

0
1. The authority citation for part 2 is revised to read as follows:

    Authority: 5 U.S.C. 301; Executive Order 13198, 66 FR 8497, 3 
CFR 2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 3 CFR 
2002 Comp., p. 258; Executive Order 13559, 75 FR 71319, 3 CFR 2011 
Comp., p. 273.

0
2. Amend Sec.  2.31 by revising paragraphs (a) and (f) to read as 
follows:


Sec.  2.31  Definitions.

* * * * *
    (a) The term Federal financial assistance means assistance that 
non-Federal entities (including State and local governments) receive or 
administer in the form of grants, contracts, loans, loan guarantees, 
property, cooperative agreements, direct appropriations, or other 
direct or indirect assistance, but does not include a tax credit, 
deduction or exemption. Federal financial assistance may be direct or 
indirect.
    (1) The term direct Federal financial assistance or Federal 
financial assistance provided directly means that the Government or a 
DOL social service intermediary provider under this part selects the 
provider and either purchases services from that provider (e.g., via a 
contract) or awards funds to that provider to carry out a service 
(e.g., via grant or cooperative agreement). In general, Federal 
financial assistance shall be treated as direct, unless it meets the 
definition of indirect Federal financial assistance or Federal 
financial assistance provided indirectly.
    (2) The term indirect Federal financial assistance or Federal 
financial assistance provided indirectly means that the choice of the 
service provider is placed in the hands of the beneficiary, and the 
cost of that service is paid through a voucher, certificate, or other 
similar means of government-funded payment. Federal financial 
assistance provided to an organization is considered indirect when:
    (i) The Government program through which the beneficiary receives 
the voucher, certificate, or other similar means of Government-funded 
payment is neutral toward religion;
    (ii) The organization receives the assistance as a result of a 
decision of the beneficiary, not a decision of the government; and
    (iii) The beneficiary has at least one adequate secular option for 
the use of the voucher, certificate, or other similar means of 
Government-funded payment.
    (3) The recipient of sub-awards received through programs 
administered by States or other intermediaries that are themselves 
recipients of Federal financial assistance (e.g., local areas that 
receive within-state allocations to provide workforce services under 
title I of the Workforce Innovation and Opportunity Act) are not 
considered recipients of indirect Federal financial assistance or 
recipients of Federal financial assistance provided indirectly as those 
terms are used in Executive Order 13559. These recipients of sub-awards 
are considered recipients of direct Federal financial assistance.
* * * * *
    (f) The term DOL social service intermediary provider means any DOL 
social service provider, including a non-governmental organization, 
that, as part of its duties, selects subgrantees to receive DOL support 
or subcontractors to provide DOL-supported services, or has the same 
duties under this part as a governmental entity.
0
3. Amend Sec.  2.32 by revising paragraph (b) introductory text and 
paragraph (c) to read as follows:


Sec.  2.32  Equal participation of religious organizations.

* * * * *
    (b) A religious organization that is a DOL social service provider 
retains its independence from Federal, State, and local governments and 
must be permitted to continue to carry out its mission, including the 
definition, development, practice, and expression of its religious 
beliefs, subject to the provisions of Sec.  2.33. Among other things, 
such a religious organization must be permitted to:
* * * * *
    (c) A grant document, contract or other agreement, covenant, 
memorandum of understanding, policy, or regulation that is used by DOL, 
a State or local government administering DOL support, or a DOL social 
service intermediary provider must not require only religious 
organizations to provide assurances that they will not use direct DOL 
support for explicitly religious activities (including activities that 
involve overt religious content, such as worship, religious 
instruction, or proselytization). Any such requirements must apply 
equally to both religious and other organizations. All organizations, 
including religious ones, that are DOL social service providers must 
carry out

[[Page 47337]]

DOL-supported activities in accordance with all applicable legal and 
programmatic requirements, including those prohibiting the use of 
direct DOL support for explicitly religious activities (including 
activities that involve overt religious content, such as worship, 
religious instruction, or proselytization). A grant document, contract 
or other agreement, covenant, memorandum of understanding, policy, or 
regulation that is used by DOL, a State or local government, or a DOL 
social service intermediary provider in administering a DOL social 
service program must not disqualify organizations from receiving DOL 
support or participating in DOL programs on the grounds that such 
organizations are motivated or influenced by religious faith to provide 
social services, have a religious character or affiliation, or lack a 
religious component.
0
4. Amend Sec.  2.33 by revising paragraph (b)(1) and paragraph (b)(3) 
introductory text, and adding a new paragraph (d) to read as follows:


Sec.  2.33  Responsibilities of DOL, DOL social service providers and 
State and local governments administering DOL support.

* * * * *
    (b)(1) DOL, DOL social service intermediary providers, DOL social 
service providers, and State and local governments administering DOL 
support must ensure that they do not use direct DOL support for 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization). DOL social service providers must be permitted to 
offer explicitly religious activities so long as they offer those 
activities separately in time or location from social services 
receiving direct DOL support, and participation in the explicitly 
religious activities is voluntary for the beneficiaries of social 
service programs receiving direct DOL support. For example, 
participation in an explicitly religious activity must not be a 
condition for participating in a directly-supported social service 
program.
    * * *
    (3) Notwithstanding the requirements of paragraph (b)(1) of this 
section, and to the extent otherwise permitted by Federal law 
(including constitutional requirements), direct DOL support may be used 
to support explicitly religious activities (including activities that 
involve overt religious content such as worship, religious instruction, 
or proselytization), and such activities need not be provided 
separately in time or location from other DOL-supported activities, 
under the following circumstances:
    * * *
    (d) If an intermediary, acting under a contract, grant, or other 
agreement with the Federal government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services funded by the Federal government, the intermediary must ensure 
compliance with the provisions of Executive Order 13279, as amended by 
Executive Order 13559, and any implementing rules or guidance, by the 
recipient of a contract, grant or agreement. If the intermediary is a 
non-governmental organization, it retains all other rights of a non-
governmental organization under the program's statutory and regulatory 
provisions.
* * * * *


Sec. Sec.  2.34, 2.35, and 2.36  [Redesignated as Sec. Sec.  2.36, 
2.37, and 2.38]

0
5. Redesignate Sec. Sec.  2.34, 2.35, and 2.36 as Sec.  2.36, Sec.  
2.37, and Sec.  2.38, respectively.
0
6. Add new Sec.  2.34 and Sec.  2.35 to subpart D to read as follows:


Sec.  2.34  Beneficiary protections: Written notice.

    (a) Contents. Religious organizations providing social services to 
beneficiaries under a DOL program supported by direct Federal financial 
assistance must give written notice to beneficiaries and prospective 
beneficiaries of certain protections. Such notice must be given in a 
manner prescribed by DOL, and state that:
    (1) The organization may not discriminate against beneficiaries on 
the basis of religion or religious belief;
    (2) The organization may not require beneficiaries to attend or 
participate in any explicitly religious activities (including 
activities that involve overt religious content such as worship, 
religious instruction, or proselytization) that are offered by our 
organization, and any participation by beneficiaries in such activities 
must be purely voluntary;
    (3) The organization must separate out in time or location any 
privately-funded explicitly religious activities (including activities 
that involve overt religious content such as worship, religious 
instruction, or proselytization) from activities supported with direct 
Federal financial assistance;
    (4) If a beneficiary objects to the religious character of the 
organization, the organization must make reasonable efforts to identify 
and refer the beneficiary to an alternative provider to which the 
beneficiary has no objection. The organization cannot guarantee, 
however, that in every instance, an alternative provider will be 
available; and
    (5) Beneficiaries may report violations of these protections to the 
U.S. Department of Labor (or, the intermediary, if applicable). The 
required language of the notice is set forth below and may be 
downloaded from the Center for Faith-Based and Neighborhood 
Partnerships' Web site at http://www.dol.gov/cfbnp. DOL social service 
providers may post and distribute exact duplicate copies of the notice, 
including through electronic means:
NOTICE OF BENEFICIARY RELIGIOUS LIBERTY PROTECTIONS

Name of Organization:

Name of Program:

Contact information for Program Staff (name, phone number, and email 
address, if appropriate):

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    Because this program is supported in whole or in part by financial 
assistance from the Federal Government, we are required to let you know 
that:
    (1) We may not discriminate against you on the basis of religion or 
religious belief;
    (2) We may not require you to attend or participate in any 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization) that are offered by our organization, and any 
participation by beneficiaries in such activities must be purely 
voluntary;
    (3) We must separate out in time or location any privately-funded 
explicitly religious activities (including activities that involve 
overt religious content such as worship, religious instruction, or 
proselytization) from activities supported with direct Federal 
financial assistance;
    (4) If you object to the religious character of an organization, we 
must make reasonable efforts to identify and refer you to an 
alternative provider to which you have no objection. We cannot 
guarantee, however, that in every instance, an alternative provider 
will be available; and
    (5) You may report violations of these protections to the U.S. 
Department of Labor's Civil Rights Center, 200 Constitution Ave. NW., 
Room N-4123, Washington, DC 20210, or by email to 
[email protected]. This written notice must be given to you 
prior to the

[[Page 47338]]

time you enroll in the program or receive services from such programs, 
unless the nature of the service provided or urgent circumstances makes 
it impracticable to provide such notice in advance of the actual 
service. In such an instance, this notice must be given to you at the 
earliest available opportunity.

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BENEFICARY REFERRAL REQUEST

If you object to receiving services from us based on the religious 
character of our organization, please complete this form and return it 
to the program contact identified above. If you object, we will make 
reasonable efforts to refer you to another service provider. With your 
consent, we will follow up with you or the organization to which you 
were referred to determine whether you contacted that organization.

Please check if applicable:
    ( ) I want to be referred to another service provider. If you 
checked above that you wish to be referred to another service provider, 
please check one of the following:
    ( ) Please follow up with me or the other service provider.
    Name:
    Best way to reach me (phone/address/email):
    ( ) Please do not follow up.

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    (b) Timing of notice. This written notice must be given to 
beneficiaries prior to the time they enroll in the program or receive 
services from such programs. When the nature of the service provided or 
exigent circumstances make it impracticable to provide such written 
notice in advance of the actual service, DOL social service providers 
must advise beneficiaries of their protections at the earliest 
available opportunity.


Sec.  2.35  Beneficiary protections: Referral requirements.

    (a) If a beneficiary or prospective beneficiary of a social service 
program supported by direct DOL financial assistance objects to the 
religious character of an organization that provides services under the 
program, that organization must promptly undertake reasonable efforts 
to identify and refer the beneficiary to an alternative provider to 
which the prospective beneficiary has no objection.
    (b) A referral may be made to another religious organization, if 
the beneficiary has no objection to that provider. But if the 
beneficiary requests a secular provider, and a secular provider is 
available, then a referral must be made to that provider.
    (c) Except for services provided by telephone, internet, or similar 
means, the referral must be to an alternative Federally-financed 
provider that is in reasonable geographic proximity to the organization 
making the referral and that offers services that are similar in 
substance and quality to those offered by that organization. The 
alternative provider also must have the capacity to accept additional 
clients. Where there is no Federally-financed alternative provider 
available, a referral should be made to an alternative provider that 
does not receive Federal financial assistance but does meet these 
requirements and is acceptable to the beneficiary.
    (d) When the organization makes a referral to an alternative 
provider, or when the organization determines that it is unable to 
identify an alternative provider, the organization shall notify the 
awarding entity. If the organization is unable to identify an 
alternative provider, the awarding entity shall determine whether there 
is any other suitable alternative provider to which the beneficiary may 
be referred.
    (e) An intermediary that receives a request for assistance in 
identifying an alternative provider may request assistance from DOL.
0
7. Add new Sec.  2.39 to subpart D to read as follows:


Sec.  2.39  Political or religious affiliation.

    Decisions about awards of Federal financial assistance must be free 
from political interference or even the appearance of such interference 
and must be made on the basis of merit, not on the basis of religion or 
religious belief.

    Dated: February 12, 2015.
Thomas E. Perez,
Secretary of Labor.
[FR Doc. 2015-18260 Filed 8-5-15; 8:45 am]
BILLING CODE P